Anuj Puri: The ‘I’ In BRICS Now Implies Hope

Back again at this year’s edition of the World Economic Forum, the experience is definitely bracing. It is awe-inspiring to once again be a part of this influential global community, and to absorb the varied macro-economic perspectives, as it was during my previous visits.

On Day 1, I made a beeline to the India session chaired by Finance Minister Arun Jaitley. According to Jaitley, India’s GDP can potentially grow to 9%, provided the country gets a facilitating global economic environment to operate. A clear takeaway is that we are the fastest growing amongst the emerging markets – as a consequence, the ‘I’ in BRICS now signifies hope for the world.

There was general affirmation that there is no risk of a repeat of ‘2008’; however, there is no ignoring the economic and financial challenges currently in the global ecosystem. There was a lot of rumbling about the inherent risk from China, and the possible repercussions if the country does not have a soft landing.

The US market apparently still presents a mixed bag – surprising, given the general impression that it is back on a growth curve. US-based energy and manufacturing firms are apparently slowing down in performance. Then there are geopolitical risks arising from the Middle East which threaten to derail.

However, on the brighter side, the reduction in Brent and commodity prices has definitely helped us. I am told that at one point, oil prices were predicted to touch $100 a barrel; had that happened, the Indian rupee would have been at INR 100 against the USD.

There is also common consensus that India’s exciting entrepreneurial ecosystem is expanding, leading to more entrepreneurs and tech start-ups. However this rising tide needs to be channelled. India will miss the bus again if it does not harness this entrepreneurial energy (an opportunity which is being served to us the second time). Already, we hear rumours of the Great Indian Start-up Boom beginning to lose some of its decibels. That may be overly pessimistic – in my own opinion, we’re merely seeing normal churn.

However, voices a few steps removed from us were more upbeat. Professor Nouriel Roubini of New York University actually stated that if there was any place in the world where he would prefer to gestate a start-up, India comes a close second after Silicon Valley. I tend to share his optimism, considering how much real estate they are currently consuming!

The discussion concluded with actions that India needs to take over the immediate term:

Ideally, the country’s private sector should have led the investment drive for growth infusion. However, with our steel and power industries undergoing a slowdown, Indian corporates are not investing. This is why the Indian government plans to step in and shepherd growth. No delegations this time around… do it yourself or don’t do it at all.

Investments into the development of India’s human capital need be scaled up if we are to leverage our much-vaunted demographic dividend. Over the next few years, we will have 5.5 million software programmers – more than those in America. However, this accounts for only the top tier of our human capital. India must train and skill the rest, as well. (I have to agree with the deduction that nobody is served if a country focuses only on churning out generals and no soldiers, so to speak.)

Our regulatory framework must be streamlined so that it is more conducive to innovation. We are talking about sweeping, visionary long-term and sustainable policy reforms here – not quick fixes to hopelessly obsolete and risky counter-productive policies. Among these, the world is particularly watching and waiting for India to implement the GST bill – in fact, if this one features prominently in the upcoming Union Budget, it wouldn’t be a moment too soon.

All in all, it was an exhilarating session that left me alternately beaming with pride and whispering a prayer. But hey, nobody ever assumed that the Indian Story would be a cakewalk. Are we equipped for the task ahead? We had better be, because the rest of the world is watching closely.